New Stimulus Package

[cudalyon]

I don't know the exact numbers now because my memory is deteriorating with the rest of my body, but I heard on the radio this morning that only around 10 billion of the proposed 825 billion dollars will be spent this year to stimulate the economy. The rest is for next year and several years down the road. What does this mean? My opinion is that this means that this entire package stands absolutely no chance of helping out the economy. They are screaming that we need to hurry and pass this because the Country is in dire needs of this package, but it will have no direct effect for several years. Does anyone else see something wrong with this?

[Visinedrops]

I think an infusion of money is the last thing this country needs. Billions of dollars are being printed with no significant backing of said dollars. If you give out something that has no value, then you'll get nothing in return.
Besides, the average consumer will purchase items from stores that retail goods from other countries, meaning the more money you spend, the less there will be in the country.

Bailouts, government grants, stimulus packages...they have one thing in common, keep the people happy. Look up the word "Capitalism" and see if it mentions anything about "Bailouts".

[sd allen]

Sell your unwanted gold or silver jewelry for cash back tommorrow!!!

[Big_Saw]

Sell your unwanted gold or silver jewelry for cash back tommorrow!!!

Yeah...if you're into collecting even more worthless fiat bank notes....

[David M.]

As far as the infrastructure repairs, bridges,highways,etc. Just how many Americans do you think would be working on these improvements? I've worked with many fine people from South of the border, and I know what they do with their paychecks...they send them home. I've got several that I consider very close friends. BUT I know this would not help OUR economy. Printing more or borrowing more only compounds the existing problem.

[cudalyon]

This is very long, but a lot of good info. this is the first time that I have seen it broken down this well.



Obama Stimulus Package Breakdown
January 26, 2009 - 11:16 ET

What is the money being spent on-general breakdown between infrastructure, tax cuts, etc…?

Some highlights of the package, by the numbers:

• $825 billion total (as of 1/15/09)
• $550 billion in new spending, described as thoughtful and carefully targeted priority investments with unprecedented accountability measures built in.
• $275 billion in tax relief ($1,000 tax cut for families, $500 tax cut for individuals through SS payroll deductions)
• $ 90 billion for infrastructure
• $ 87 billion Medicaid aid to states
• $ 79 billion school districts/public colleges to prevent cutbacks
• $ 54 billion to encourage energy production from renewable sources
• $ 41 billion for additional school funding ($14 billion for school modernizations and repairs, $13 billion for Title I, $13 billion for IDEA special education funding, $1 billion for education technology)
• $ 24 billion for "health information technology to prevent medical mistakes, provide better care to patients and introduce cost-saving efficiencies" and "to provide for preventative care and to evaluate the most effective healthcare treatments."
• $ 16 billion for science/technology ($10 billion for science facilities, research, and instrumentation; $6 billion to expand broadband to rural areas)
• $ 15 billion to increase Pell grants by $500
• $ 6 billion for the ambiguous "higher education modernization."

[Source: Committee on Appropriations: January 15, 2009]

Here is a further breakdown of the package:

NOTE: The following are highlights of the package; for the full 13-page summary from the Appropriations Committee, click here:

(as of 1/15/09)

Energy
$32 billion: Funding for "smart electricity grid" to reduce waste
$16 billion: Renewable energy tax cuts and a tax credit for research and development on energy-related work, and a multiyear extension of renewable energy production tax credit
$6 billion: Funding to weatherize modest-income homes

Science and Technology
$10 billion: Science facilities
$6 billion: High-speed Internet access for rural and underserved areas

Infrastructure
$30 billion: Transportation projects
$31 billion: Construction and repair of federal buildings and other public infrastructure
$19 billion: Water projects
$10 billion: Rail and mass transit projects

Education
$41 billion: Grants to local school districts
$79 billion: State fiscal relief to prevent cuts in state aid
$21 billion: School modernization ($15.6 billion to increase the Pell grant by $500; $6 billion for higher education modernization)

Health Care
$39 billion: Subsidies to health insurance for unemployed; providing coverage through Medicaid
$87 billion: Help to states with Medicaid
$20 billion: Modernization of health-information technology systems
$4.1 billion: Preventative care

Jobless Benefits
$43 billion for increased unemployment benefits and job training.
$39 billion to support those who lose their jobs by helping them to pay the cost of keeping their employer provided healthcare under COBRA and providing short-term options to be covered by Medicaid.
$20 billion to increase the food stamp benefit by over 13% in order to help defray rising food costs.

Taxes

Individuals:

*$500 per worker, $1,000 per couple tax cut for two years, costing about $140 billion.
*Greater access to the $1,000-per-child tax credit for the working poor.
*Expansion of the earned-income tax credit to include families with three children
*A $2,500 college tuition tax credit.
*Repeal of a requirement that a $7,500 first-time homebuyer tax credit be paid back over time.

Businesses:

*An infusion of cash into money-losing companies by allowing them to claim tax credits on past profits dating back five years instead of two.
*Bonus depreciation for businesses investing in new plants and equipment
*Doubling of the amount small businesses can write off for capital investments and new equipment purchases.
*Allowing businesses to claim a tax credit for hiring disconnected youth and veterans

[Sources: Associated Press: Highlights of Senate economic stimulus plan; January 23, 2009; WSJ: Stimulus Package Unveiled; January 16, 2009; Committee on Appropriations: January 15, 2009]

When is the money being is going to be spent, and on what?

The government wouldn't be able to spend at least one-fourth of a proposed $825 billion economic stimulus plan until after 2010, according to a preliminary report by the Congressional Business Office that suggests it may take longer than expected to boost the economy. The government would spend about $26 billion of the money this year and $110 billion more next year, the report said. About $103 billion would be spent in 2011, while $53 billion would be spent in 2012 and $63 billion between 2013 and 2019.

• Less than $5 billion of the $30 billion set aside for highway spending would be spent within the next two years, the CBO said.

• Only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 percent.

• Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

• About $907 million of a $6 billion plan to expand broadband access in rural and other underserved areas would be spent by 2011, CBO said.

• Just one-fourth of clean drinking water projects can be completed by October of next year.

• $275 billion worth of tax cuts to 95 percent of filers and a huge infusion of help for state governments is to be distributed into the economy more quickly.

[Note: The CBO's analysis applied only to 40 percent of the overall stimulus bill, and doesn't cover tax cuts or efforts; a CBO report outlining all of its costs is expected in the next week or so.]

• The Obama administration said $3 of every $4 in the package should be spent within 18 months to have maximum impact on jobs and taxpayers; if House or Senate versions of the bill do not spend the money as quickly, the White House will work with lawmakers to achieve the goal of spending 75% of the overall package over the next year and a half.

[Source: AP: Three-quarters of stimulus to go in 18 months; January 22, 2009; Bloomberg News: Much of Stimulus Wont Be Spent Before 2011, CBO Says; January 20, 2009; link]

Who will be spending the money? Will the states be receiving any money to spend, community organizations? Churches?

The economic stimulus plan now moving through Congress would shower billions of federal dollars on state and local governments desperate for cash:

• The House stimulus bill includes an extra $87 billion in federal aid to state Medicaid programs.

• It allots some $120 billion to boost state and city education programs.

• There's $4 billion for state and local anticrime initiatives in the legislation, not to mention $30-plus billion for highways and other infrastructure projects.

• $6.9 billion to help state and local governments make investments that make them more energy efficient and reduce carbon emissions.

• $87 billion to states, increasing through the end of FY 2010 the share of Medicaid costs the Federal government reimburses all states by 4.8 percent, with extra relief tied to rates of unemployment.

• $120 billion to states and school districts to stabilize budgets and prevent tax increases and deep cuts to critical education programs.

Overall, about one-quarter of the entire $825 billion recovery package would be devoted to activities crucial to governors, mayors, and local school boards - making them among the plans biggest beneficiaries.

[TLM]

Thanks Cudalyon,
It looks like maybe 1/3 might be worthwhile spending.
The other 500+Billion, a total freaking waste that our Children will have to pay for.

[Big_Saw]

Arkansas is getting a few million for road repair....wonder if my tax rates will be lowered, since the funds are comin' from the feds.....NOT!!!!!!!

[KY_Longrifle]

The other 500+Billion, a total freaking waste that our Children will have to pay for.

And their children, and theirs also. Ain't publicly owned debt GRAND!

[ridgid1]

i agree with david!!

[TLM]

I guess the guys on Wall Street aren't too optimistic on what the President had to say.. Dow down 268 at 12:00.

Or maybe it's just a coincedence.

[Big_Saw]

I guess the guys on Wall Street aren't too optimistic on what the President had to say.. Dow down 268 at 12:00.

Or maybe it's just a coincedence.

The smart folks are selling off fast....I liquidated over 95% of my stocks last February....I knew it was coming, and so did a few others. Now the slow-pokes are finally getting the hint.

[cwconnertx]

I moved over 90% of my money out of stocks 2 years ago. I used to work in the banking industry and knew what was going on. You cannot fix a problem caused by irresponsible borrowing and spending with more irresponsible borrowing and spending.

I saw with my own eyes how much people owed in personal credit that they could never possibly pay off with their income. Only ever increasing asset prices allowed the shell game to continue.

The fact is deflation can be devasting and pumping currency out is what helps stop it, but I'm afraid when the deflation has subsided the only way out of the mess will be to inflate the debt away. Perhaps that is what they have in mind all along, but it might bet nasty.

I personally feel the things to be prepared for are the human reactions to instability. I worry about riots, ala katrina, possible to include those who would cross the border to take what they need to survive.

One way or another, the financial system will not look like it does now, whether deflation or inflation wins out, the outcome cannot be good for most. I personally feel that the government will pump out so much money inflation will be the outcome in the end. Inflation also solves the government debt problem as the debt can be paid back with worthless bank notes. Makes you want to buy a T-bill right?

The best hedge for inflation is to buy the things you might need in the future now. If you were absolutely sure inflation was coming then the best course would be to borrow all you can and pay it back later with cheaper money, but who knows how long it will be before the inevitable inflation of the spending orgy will come?

[cudalyon]

I went to get preapproved for a home loan a few years back and the guy calls me up and said"I got good news, you are approved" I paused for a second and asked how he knew if I was approved or not, I never gave him the price of the house I was looking at. I have a strange feeling it would not have mattered how much it cost.

[Big_Saw]

I went to get preapproved for a home loan a few years back and the guy calls me up and said"I got good news, you are approved" I paused for a second and asked how he knew if I was approved or not, I never gave him the price of the house I was looking at. I have a strange feeling it would not have mattered how much it cost.

Just get on the debt snowball plan that Dave Ramsey teaches and get rid of your debt...if you own your car, house, and don't owe anybody but your monthly utilities, you'll survive even a deep depression....

....you could literally collect enough cans from the side of the road to pay your necessities, if you had to....as long as you own your stuff out-right...